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Sony records $962M goodwill impairment charge for Pictures segment

Sony Corp. recorded an impairment charge against the goodwill of its Pictures segment of ¥112.1 billion in the third quarter ended Dec. 31, 2016.

The company recorded the impairment charge due to a downward revision in the future profitability projection for the Motion Pictures business within the Pictures segment, the company said Jan. 30. The revision occurred mainly due to the reduction of the previous expectations regarding the home entertainment business, mainly driven by an acceleration of market decline. The Pictures segment has two reporting units for goodwill: Production & Distribution, which includes the Motion Pictures and the Television Productions businesses, and Media Networks.

Underlying profitability projections of film performance were also reduced, but the adverse impact of that reduction is expected to be largely mitigated by measures that have been identified to improve the profitability of the Motion Pictures business, the company said.

A majority of the goodwill that was impaired was originally recorded at the time of the acquisition of Columbia Pictures Entertainment Inc. in 1989. The company is currently evaluating the impact on the consolidated results forecast for the fiscal year ending March 31 of this impairment and other factors. The company is expected to disclose more details with the results for the third quarter ended Dec. 31, 2016, on Feb. 2.

On an overall basis, profit is expected to grow due to steps currently being undertaken to improve the profitability of the Motion Pictures business and further expansion of the Television Productions and Media Networks businesses.

As per conversion rate used by Sony, US$1 was equivalent to ¥116.49.